2006 Code of Virginia § 38.2-6200 - Form of Compact

38.2-6200. Form of Compact.

The General Assembly hereby enacts, and the Commonwealth of Virginia herebyenters into, the Interstate Insurance Product Regulation Compact with any andall states legally joining therein according to its terms, in the formsubstantially as follows:

Article I.

Purposes.

The purposes of this Compact are, through means of joint and cooperativeaction among the Compacting States:

1. To promote and protect the interest of consumers of individual and groupannuity, life insurance, disability income and long-term care insuranceproducts;

2. To develop uniform standards for insurance products covered under theCompact;

3. To establish a central clearinghouse to receive and provide prompt reviewof insurance products covered under the Compact and, in certain cases,advertisements related thereto, submitted by insurers authorized to dobusiness in one or more Compacting States;

4. To give appropriate regulatory approval to those product filings andadvertisements satisfying the applicable uniform standard;

5. To improve coordination of regulatory resources and expertise betweenstate insurance departments regarding the setting of uniform standards andreview of insurance products covered under the Compact;

6. To create the Interstate Insurance Product Regulation Commission; and

7. To perform these and such other related functions as may be consistentwith the state regulation of the business of insurance.

Article II.

Definitions.

For purposes of this Compact:

1. "Advertisement" means any material designed to create public interest ina Product, or induce the public to purchase, increase, modify, reinstate,borrow on, surrender, replace, or retain a policy, as more specificallydefined in the Rules and Operating Procedures of the Commission.

2. "Bylaws" mean those bylaws established by the Commission for itsgovernance, or for directing or controlling the Commission's actions orconduct.

3. "Compacting State" means any State which has enacted this Compactlegislation and which has not withdrawn pursuant to Article XIV, Section 1,or been terminated pursuant to Article XIV, Section 2.

4. "Commission" means the "Interstate Insurance Product RegulationCommission" established by this Compact.

5. "Commissioner" means the chief insurance regulatory official of a Stateincluding, but not limited to, commissioner, superintendent, director, oradministrator.

6. "Domiciliary State" means the state in which an Insurer is incorporatedor organized; or, in the case of an alien Insurer, its state of entry.

7. "Insurer" means any entity licensed by a State to issue contracts ofinsurance for any of the lines of insurance covered by this Act.

8. "Member" means the person chosen by a Compacting State as itsrepresentative to the Commission, or his or her designee.

9. "Non-compacting State" means any State which is not at the time aCompacting State.

10. "Operating Procedures" mean procedures promulgated by the Commissionimplementing a Rule, Uniform Standard or a provision of this Compact.

11. "Product" means the form of a policy or contract, including anyapplication, endorsement, or related form which is attached to and made apart of the policy or contract, and any evidence of coverage or certificate,for an individual or group annuity, life insurance, disability income orlong-term care insurance product that an Insurer is authorized to issue.

12. "Rule" means a statement of general or particular applicability andfuture effect promulgated by the Commission, including a Uniform Standarddeveloped pursuant to Article VII of this Compact, designed to implement,interpret, or prescribe law or policy or describing the organization,procedure, or practice requirements of the Commission, which shall have theforce and effect of law in the Compacting States.

13. "State" means any state, district or territory of the United States ofAmerica.

14. "Third-Party Filer" means an entity that submits a Product filing tothe Commission on behalf of an Insurer.

15. "Uniform Standard" means a standard adopted by the Commission for aProduct line, pursuant to Article VII of this Compact, and shall include allof the Product requirements in aggregate; provided, that each UniformStandard shall be construed, whether express or implied, to prohibit the useof any inconsistent, misleading or ambiguous provisions in a Product and theform of the Product made available to the public shall not be unfair,inequitable or against public policy as determined by the Commission.

Article III.

Establishment of the Commission and Venue.

1. The Compacting States hereby create and establish a joint public agencyknown as the "Interstate Insurance Product Regulation Commission." Pursuantto Article IV, the Commission will have the power to develop UniformStandards for Product lines, receive and provide prompt review of Productsfiled therewith, and give approval to those Product filings satisfyingapplicable Uniform Standards; provided, it is not intended for the Commissionto be the exclusive entity for receipt and review of insurance productfilings. Nothing herein shall prohibit any Insurer from filing its product inany State wherein the Insurer is licensed to conduct the business ofinsurance; and any such filing shall be subject to the laws of the Statewhere filed.

2. The Commission is a body corporate and politic, and an instrumentality ofthe Compacting States.

3. The Commission is solely responsible for its liabilities except asotherwise specifically provided in this Compact.

4. Venue is proper and judicial proceedings by or against the Commissionshall be brought solely and exclusively in a court of competent jurisdictionwhere the principal office of the Commission is located.

Article IV.

Powers of the Commission.

The Commission shall have the following powers:

1. To promulgate Rules, pursuant to Article VII of this Compact, which shallhave the force and effect of law and shall be binding in the CompactingStates to the extent and in the manner provided in this Compact;

2. To exercise its rule-making authority and establish reasonable UniformStandards for Products covered under the Compact, and Advertisement relatedthereto, which shall have the force and effect of law and shall be binding inthe Compacting States, but only for those Products filed with the Commission,provided, that a Compacting State shall have the right to opt out of suchUniform Standard pursuant to Article VII, to the extent and in the mannerprovided in this Compact, and, provided further, that any Uniform Standardestablished by the Commission for long-term care insurance products mayprovide the same or greater protections for consumers as, but shall notprovide less than, those protections set forth in the National Association ofInsurance Commissioners' Long-Term Care Insurance Model Act and Long-TermCare Insurance Model Regulation, respectively, adopted as of 2001. TheCommission shall consider whether any subsequent amendments to the NAICLong-Term Care Insurance Model Act or Long-Term Care Insurance ModelRegulation adopted by the NAIC require amending of the Uniform Standardsestablished by the Commission for long-term care insurance products;

3. To receive and review in an expeditious manner Products filed with theCommission, and rate filings for disability income and long-term careinsurance Products, and give approval of those Products and rate filings thatsatisfy the applicable Uniform Standard, where such approval shall have theforce and effect of law and be binding on the Compacting States to the extentand in the manner provided in the Compact;

4. To receive and review in an expeditious manner Advertisement relating tolong-term care insurance products for which Uniform Standards have beenadopted by the Commission, and give approval to all Advertisement thatsatisfies the applicable Uniform Standard. For any product covered under thisCompact, other than long-term care insurance products, the Commission shallhave the authority to require an insurer to submit all or any part of itsAdvertisement with respect to that product for review or approval prior touse, if the Commission determines that the nature of the product is suchthat an Advertisement of the product could have the capacity or tendency tomislead the public. The actions of Commission as provided in this sectionshall have the force and effect of law and shall be binding in the CompactingStates to the extent and in the manner provided in the Compact;

5. To exercise its rule-making authority and designate Products andAdvertisement that may be subject to a self-certification process without theneed for prior approval by the Commission;

6. To promulgate Operating Procedures, pursuant to Article VII of thisCompact, which shall be binding in the Compacting States to the extent and inthe manner provided in this Compact;

7. To bring and prosecute legal proceedings or actions in its name as theCommission; provided, that the standing of any state insurance department tosue or be sued under applicable law shall not be affected;

8. To issue subpoenas requiring the attendance and testimony of witnesses andthe production of evidence;

9. To establish and maintain offices;

10. To purchase and maintain insurance and bonds;

11. To borrow, accept or contract for services of personnel, including, butnot limited to, employees of a Compacting State;

12. To hire employees, professionals or specialists, and elect or appointofficers, and to fix their compensation, define their duties and give themappropriate authority to carry out the purposes of the Compact, and determinetheir qualifications; and to establish the Commission's personnel policiesand programs relating to, among other things, conflicts of interest, rates ofcompensation and qualifications of personnel;

13. To accept any and all appropriate donations and grants of money,equipment, supplies, materials and services, and to receive, utilize anddispose of the same; provided that at all times the Commission shall striveto avoid any appearance of impropriety;

14. To lease, purchase, accept appropriate gifts or donations of, orotherwise to own, hold, improve or use, any property, real, personal ormixed; provided that at all times the Commission shall strive to avoid anyappearance of impropriety;

15. To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwisedispose of any property, real, personal or mixed;

16. To remit filing fees to Compacting States as may be set forth in theBylaws, Rules or Operating Procedures;

17. To enforce compliance by Compacting States with Rules, Uniform Standards,Operating Procedures and Bylaws;

18. To provide for dispute resolution among Compacting States;

19. To advise Compacting States on issues relating to Insurers domiciled ordoing business in Non-compacting jurisdictions, consistent with the purposesof this Compact;

20. To provide advice and training to those personnel in state insurancedepartments responsible for product review, and to be a resource for stateinsurance departments;

21. To establish a budget and make expenditures;

22. To borrow money;

23. To appoint committees, including advisory committees comprising Members,state insurance regulators, state legislators or their representatives,insurance industry and consumer representatives, and such other interestedpersons as may be designated in the Bylaws;

24. To provide and receive information from, and to cooperate with,law-enforcement agencies;

25. To adopt and use a corporate seal; and

26. To perform such other functions as may be necessary or appropriate toachieve the purposes of this Compact consistent with the state regulation ofthe business of insurance.

Article V.

Organization of the Commission.

1. Membership, Voting and Bylaws.

a. Each Compacting State shall have and be limited to one Member. Each Membershall be qualified to serve in that capacity pursuant to applicable law ofthe Compacting State. Any Member may be removed or suspended from office asprovided by the law of the State from which he or she shall be appointed. Anyvacancy occurring in the Commission shall be filled in accordance with thelaws of the Compacting State wherein the vacancy exists. Nothing herein shallbe construed to affect the manner in which a Compacting State determines theelection or appointment and qualification of its own Commissioner.

b. Each Member shall be entitled to one vote and shall have an opportunity toparticipate in the governance of the Commission in accordance with theBylaws. Notwithstanding any provision herein to the contrary, no action ofthe Commission with respect to the promulgation of a Uniform Standard shallbe effective unless two-thirds of the Members vote in favor thereof.

c. The Commission shall, by a majority of the Members, prescribe Bylaws togovern its conduct as may be necessary or appropriate to carry out thepurposes, and exercise the powers, of the Compact, including, but not limitedto:

i. Establishing the fiscal year of the Commission;

ii. Providing reasonable procedures for appointing and electing members, aswell as holding meetings, of the Management Committee;

iii. Providing reasonable standards and procedures: (i) for the establishmentand meetings of other committees, and (ii) governing any general or specificdelegation of any authority or function of the Commission;

iv. Providing reasonable procedures for calling and conducting meetings ofthe Commission that consists of a majority of Commission members, ensuringreasonable advance notice of each such meeting, and providing for the rightof citizens to attend each such meeting with enumerated exceptions designedto protect the public's interest, the privacy of individuals, and insurers'proprietary information, including trade secrets. The Commission may meet incamera only after a majority of the entire membership votes to close ameeting en toto or in part. As soon as practicable, the Commission must makepublic (i) a copy of the vote to close the meeting revealing the vote of eachMember with no proxy votes allowed, and (ii) votes taken during such meeting;

v. Establishing the titles, duties and authority and reasonable proceduresfor the election of the officers of the Commission;

vi. Providing reasonable standards and procedures for the establishment ofthe personnel policies and programs of the Commission. Notwithstanding anycivil service or other similar laws of any Compacting State, the Bylaws shallexclusively govern the personnel policies and programs of the Commission;

vii. Promulgating a code of ethics to address permissible and prohibitedactivities of Commission members and employees; and

viii. Providing a mechanism for winding up the operations of the Commissionand the equitable disposition of any surplus funds that may exist after thetermination of the Compact after the payment and/or reserving of all of itsdebts and obligations.

d. The Commission shall publish its Bylaws in a convenient form and file acopy thereof and a copy of any amendment thereto, with the appropriate agencyor officer in each of the Compacting States.

2. Management Committee, Officers and Personnel.

a. A Management Committee comprising no more than 14 members shall beestablished as follows:

i. One member from each of the six Compacting States with the largest premiumvolume for individual and group annuities, life, disability income, andlong-term care insurance products, determined from the records of the NAICfor the prior year;

ii. Four members from those Compacting States with at least two percent ofthe market based on the premium volume described above, other than the sixCompacting States with the largest premium volume, selected on a rotatingbasis as provided in the Bylaws; and

iii. Four members from those Compacting States with less than two percent ofthe market, based on the premium volume described above, with one selectedfrom each of the four zone regions of the NAIC as provided in the Bylaws.

b. The Management Committee shall have such authority and duties as may beset forth in the Bylaws, including but not limited to:

i. Managing the affairs of the Commission in a manner consistent with theBylaws and purposes of the Commission;

ii. Establishing and overseeing an organizational structure within, andappropriate procedures for, the Commission to provide for the creation ofUniform Standards and other Rules, receipt and review of product filings,administrative and technical support functions, review of decisions regardingthe disapproval of a product filing, and the review of elections made by aCompacting State to opt out of a Uniform Standard; provided that a UniformStandard shall not be submitted to the Compacting States for adoption unlessapproved by two-thirds of the members of the Management Committee;

iii. Overseeing the offices of the Commission; and

iv. Planning, implementing, and coordinating communications and activitieswith other state, federal and local government organizations in order toadvance the goals of the Commission.

c. The Commission shall elect annually officers from the ManagementCommittee, with each having such authority and duties as may be specified inthe Bylaws.

d. The Management Committee may, subject to the approval of the Commission,appoint or retain an executive director for such period, upon such terms andconditions and for such compensation as the Commission may deem appropriate.The executive director shall serve as secretary to the Commission, but shallnot be a Member of the Commission. The executive director shall hire andsupervise such other staff as may be authorized by the Commission.

3. Legislative and Advisory Committees.

a. A legislative committee comprising state legislators or their designeesshall be established to monitor the operations of, and make recommendationsto, the Commission, including the Management Committee; provided that themanner of selection and term of any legislative committee member shall be asset forth in the Bylaws. Prior to the adoption by the Commission of anyUniform Standard, revision to the Bylaws, annual budget, or other significantmatter as may be provided in the Bylaws, the Management Committee shallconsult with and report to the legislative committee.

b. The Commission shall establish two advisory committees, one of which shallcomprise consumer representatives independent of the insurance industry, andthe other comprising insurance industry representatives.

c. The Commission may establish additional advisory committees as its Bylawsmay provide for the carrying out of its functions.

4. Corporate Records of the Commission.

The Commission shall maintain its corporate books and records in accordancewith the Bylaws.

5. Qualified Immunity, Defense and Indemnification.

a. The Members, officers, executive director, employees and representativesof the Commission shall be immune from suit and liability, either personallyor in their official capacity, for any claim for damage to or loss ofproperty or personal injury or other civil liability caused by or arising outof any actual or alleged act, error or omission that occurred, or that theperson against whom the claim is made had a reasonable basis for believingoccurred within the scope of Commission employment, duties orresponsibilities; provided, that nothing in this paragraph shall be construedto protect any such person from suit and/or liability for any damage, loss,injury or liability caused by the intentional or willful and wantonmisconduct of that person.

b. The Commission shall defend any Member, officer, executive director,employee or representative of the Commission in any civil action seeking toimpose liability arising out of any actual or alleged act, error or omissionthat occurred within the scope of Commission employment, duties orresponsibilities, or that the person against whom the claim is made had areasonable basis for believing occurred within the scope of Commissionemployment, duties or responsibilities; provided, that nothing herein shallbe construed to prohibit that person from retaining his or her own counsel;and provided further, that the actual or alleged act, error or omission didnot result from that person's intentional or willful and wanton misconduct.

c. The Commission shall indemnify and hold harmless any Member, officer,executive director, employee or representative of the Commission for theamount of any settlement or judgment obtained against that person arising outof any actual or alleged act, error or omission that occurred within thescope of Commission employment, duties or responsibilities; or that suchperson had a reasonable basis for believing occurred within the scope ofCommission employment, duties or responsibilities, provided, that the actualor alleged act, error or omission did not result from the intentional orwillful and wanton misconduct of that person.

Article VI.

Meetings and Acts of the Commission.

1. The Commission shall meet and take such actions as are consistent with theprovisions of this Compact and the Bylaws.

2. Each Member of the Commission shall have the right and power to cast avote to which that Compacting State is entitled and to participate in thebusiness and affairs of the Commission. A Member shall vote in person or bysuch other means as provided in the Bylaws. The Bylaws may provide forMembers' participation in meetings by telephone or other means ofcommunication.

3. The Commission shall meet at least once during each calendar year.Additional meetings shall be held as set forth in the Bylaws.

Article VII.

Rules and Operating Procedures: Rulemaking Functions of the Commission and Opting Out of Uniform Standards.

1. Rulemaking Authority. The Commission shall promulgate reasonable Rules,including Uniform Standards, and Operating Procedures in order to effectivelyand efficiently achieve the purposes of this Compact. Notwithstanding theforegoing, in the event the Commission exercises its rulemaking authority ina manner that is beyond the scope of the purposes of this Act, or the powersgranted hereunder, then such an action by the Commission shall be invalid andhave no force and effect.

2. Rulemaking Procedure. Rules and Operating Procedures shall be madepursuant to a rulemaking process that conforms to the Model StateAdministrative Procedure Act of 1981, as amended, as may be appropriate tothe operations of the Commission. Before the Commission adopts a UniformStandard, the Commission shall give written notice to the relevant statelegislative committee(s) in each Compacting State responsible for insuranceissues of its intention to adopt the Uniform Standard. The Commission inadopting a Uniform Standard shall consider fully all submitted materials andissue a concise explanation of its decision.

3. Effective Date and Opt Out of a Uniform Standard. A Uniform Standard shallbecome effective 90 days after its promulgation by the Commission or suchlater date as the Commission may determine; provided, however, that aCompacting State may opt out of a Uniform Standard as provided in thisArticle. "Opt out" shall be defined as any action by a Compacting State todecline to adopt or participate in a promulgated Uniform Standard. All otherRules and Operating Procedures, and amendments thereto, shall becomeeffective as of the date specified in each Rule, Operating Procedure oramendment.

4. Opt Out Procedure. A Compacting State may opt out of a Uniform Standard,either by legislation or regulation duly promulgated by the InsuranceDepartment under the Compacting State's Administrative Procedure Act or dulypromulgated pursuant to the Compacting State's law. If a Compacting Stateelects to opt out of a Uniform Standard by regulation, it must (a) givewritten notice to the Commission no later than 10 business days after theUniform Standard is promulgated, or at the time the State becomes aCompacting State and (b) find that the Uniform Standard does not providereasonable protections to the citizens of the State, given the conditions inthe State. The Commissioner or tribunal shall make specific findings of factand conclusions of law, based on a preponderance of the evidence, detailingthe conditions in the State which warrant a departure from the UniformStandard and determining that the Uniform Standard would not reasonablyprotect the citizens of the State. The Commissioner or tribunal must considerand balance the following factors and find that the conditions in the Stateand needs of the citizens of the State outweigh: (i) the intent of thelegislature to participate in, and the benefits of, an interstate agreementto establish national uniform consumer protections for the Products subjectto this Act; and (ii) the presumption that a Uniform Standard adopted by theCommission provides reasonable protections to consumers of the relevantProduct.

Notwithstanding the foregoing, a Compacting State may, at the time of itsenactment of this Compact, prospectively opt out of all Uniform Standardsinvolving long-term care insurance products by expressly providing for suchopt out in the enacted Compact, and such an opt out shall not be treated as amaterial variance in the offer or acceptance of any State to participate inthis Compact. Such an opt out shall be effective at the time of enactment ofthis Compact by the Compacting State and shall apply to all existing UniformStandards involving long-term care insurance products and those subsequentlypromulgated.

5. Effect of Opt Out. If a Compacting State elects to opt out of a UniformStandard, the Uniform Standard shall remain applicable in the CompactingState electing to opt out until such time the opt out legislation is enactedinto law or the regulation opting out becomes effective.

Once the opt out of a Uniform Standard by a Compacting State becomeseffective as provided under the laws of that State, the Uniform Standardshall have no further force and effect in that State unless and until thelegislation or regulation implementing the opt out is repealed or otherwisebecomes ineffective under the laws of the State. If a Compacting State optsout of a Uniform Standard after the Uniform Standard has been made effectivein that State, the opt out shall have the same prospective effect as providedunder Article XIV for withdrawals.

6. Stay of Uniform Standard. If a Compacting State has formally initiated theprocess of opting out of a Uniform Standard by regulation, and while theregulatory opt out is pending, the Compacting State may petition theCommission, at least 15 days before the effective date of the UniformStandard, to stay the effectiveness of the Uniform Standard in that State.The Commission may grant a stay if it determines the regulatory opt out isbeing pursued in a reasonable manner and there is a likelihood of success. Ifa stay is granted or extended by the Commission, the stay or extensionthereof may postpone the effective date by up to 90 days, unlessaffirmatively extended by the Commission; provided, a stay may not bepermitted to remain in effect for more than one year unless the CompactingState can show extraordinary circumstances which warrant a continuance of thestay, including, but not limited to, the existence of a legal challenge whichprevents the Compacting State from opting out. A stay may be terminated bythe Commission upon notice that the rulemaking process has been terminated.

7. Not later than 30 days after a Rule or Operating Procedure is promulgated,any person may file a petition for judicial review of the Rule or OperatingProcedure; provided, that the filing of such a petition shall not stay orotherwise prevent the Rule or Operating Procedure from becoming effectiveunless the court finds that the petitioner has a substantial likelihood ofsuccess. The court shall give deference to the actions of the Commissionconsistent with applicable law and shall not find the Rule or OperatingProcedure to be unlawful if the Rule or Operating Procedure represents areasonable exercise of the Commission's authority.

Article VIII.

Commission Records and Enforcement.

1. The Commission shall promulgate Rules establishing conditions andprocedures for public inspection and copying of its information and officialrecords, except such information and records involving the privacy ofindividuals and insurers' trade secrets. The Commission may promulgateadditional Rules under which it may make available to federal and stateagencies, including law-enforcement agencies, records and informationotherwise exempt from disclosure, and may enter into agreements with suchagencies to receive or exchange information or records subject tonondisclosure and confidentiality provisions.

2. Except as to privileged records, data and information, the laws of anyCompacting State pertaining to confidentiality or nondisclosure shall notrelieve any Compacting State Commissioner of the duty to disclose anyrelevant records, data, or information to the Commission; provided, thatdisclosure to the Commission shall not be deemed to waive or otherwise affectany confidentiality requirement; and further provided, that, except asotherwise expressly provided in this Act, the Commission shall not be subjectto the Compacting State's laws pertaining to confidentiality andnondisclosure with respect to records, data, and information in itspossession. Confidential information of the Commission shall remainconfidential after such information is provided to any Commissioner.

3. The Commission shall monitor Compacting States for compliance with dulyadopted Bylaws, Rules, including Uniform Standards, and Operating Procedures.The Commission shall notify any non-complying Compacting State in writing ofits noncompliance with Commission Bylaws, Rules or Operating Procedures. If anoncomplying Compacting State fails to remedy its noncompliance within thetime specified in the notice of noncompliance, the Compacting State shall bedeemed to be in default as set forth in Article XIV.

4. The Commissioner of any State in which an Insurer is authorized to dobusiness, or is conducting the business of insurance, shall continue toexercise his or her authority to oversee the market regulation of theactivities of the Insurer in accordance with the provisions of the State'slaw. The Commissioner's enforcement of compliance with the Compact isgoverned by the following provisions:

a. With respect to the Commissioner's market regulation of a Product orAdvertisement that is approved or certified to the Commission, the content ofthe Product or Advertisement shall not constitute a violation of theprovisions, standards or requirements of the Compact except upon a finalorder of the Commission, issued at the request of a Commissioner after priornotice to the Insurer and an opportunity for hearing before the Commission.

b. Before a Commissioner may bring an action for violation of any provision,standard or requirement of the Compact relating to the content of anAdvertisement not approved or certified to the Commission, the Commission, oran authorized Commission officer or employee, must authorize the action.However, authorization pursuant to this paragraph does not require notice tothe Insurer, opportunity for hearing or disclosure of requests forauthorization or records of the Commission's action on such requests.

Article IX.

Dispute Resolution.

The Commission shall attempt, upon the request of a Member, to resolve anydisputes or other issues that are subject to this Compact and which may arisebetween two or more Compacting States, or between Compacting States andNon-compacting States, and the Commission shall promulgate an OperatingProcedure providing for resolution of such disputes.

Article X.

Product Filing and Approval.

1. Insurers and Third-Party Filers seeking to have a Product approved by theCommission shall file the Product with, and pay applicable filing fees to,the Commission. Nothing in this Act shall be construed to restrict orotherwise prevent an insurer from filing its Product with the insurancedepartment in any State wherein the insurer is licensed to conduct thebusiness of insurance, and such filing shall be subject to the laws of theStates where filed.

2. The Commission shall establish appropriate filing and review processes andprocedures pursuant to Commission Rules and Operating Procedures.Notwithstanding any provision herein to the contrary, the Commission shallpromulgate Rules to establish conditions and procedures under which theCommission will provide public access to Product filing information. Inestablishing such Rules, the Commission shall consider the interests of thepublic in having access to such information, as well as protection ofpersonal medical and financial information and trade secrets, that may becontained in a Product filing or supporting information.

3. Any Product approved by the Commission may be sold or otherwise issued inthose Compacting States for which the Insurer is legally authorized to dobusiness.

Article XI.

Review of Commission Decisions Regarding Filings.

1. Not later than 30 days after the Commission has given notice of adisapproved Product or Advertisement filed with the Commission, the Insureror Third Party Filer whose filing was disapproved may appeal thedetermination to a review panel appointed by the Commission. The Commissionshall promulgate Rules to establish procedures for appointing such reviewpanels and provide for notice and hearing. An allegation that the Commission,in disapproving a Product or Advertisement filed with the Commission, actedarbitrarily, capriciously, or in a manner that is an abuse of discretion orotherwise not in accordance with the law, is subject to judicial review inaccordance with Article III, section 4.

2. The Commission shall have authority to monitor, review and reconsiderProducts and Advertisement subsequent to their filing or approval upon afinding that the Product does not meet the relevant Uniform Standard. Whereappropriate, the Commission may withdraw or modify its approval after propernotice and hearing, subject to the appeal process in section 1 above.

Article XII.

Finance.

1. The Commission shall pay or provide for the payment of the reasonableexpenses of its establishment and organization. To fund the cost of itsinitial operations, the Commission may accept contributions and other formsof funding from the National Association of Insurance Commissioners,Compacting States and other sources. Contributions and other forms of fundingfrom other sources shall be of such a nature that the independence of theCommission concerning the performance of its duties shall not be compromised.

2. The Commission shall collect a filing fee from each Insurer and ThirdParty Filer filing a Product with the Commission to cover the cost of theoperations and activities of the Commission and its staff in a total amountsufficient to cover the Commission's annual budget.

3. The Commission's budget for a fiscal year shall not be approved until ithas been subject to notice and comment as set forth in Article VII of thisCompact.

4. The Commission shall be exempt from all taxation in and by the CompactingStates.

5. The Commission shall not pledge the credit of any Compacting State, exceptby and with the appropriate legal authority of that Compacting State.

6. The Commission shall keep complete and accurate accounts of all itsinternal receipts, including grants and donations, and disbursements of allfunds under its control. The internal financial accounts of the Commissionshall be subject to the accounting procedures established under its Bylaws.The financial accounts and reports including the system of internal controlsand procedures of the Commission shall be audited annually by an independentcertified public accountant. Upon the determination of the Commission, but noless frequently than every three years, the review of the independent auditorshall include a management and performance audit of the Commission. TheCommission shall make an Annual Report to the Governor and legislature of theCompacting States, which shall include a report of the independent audit. TheCommission's internal accounts shall not be confidential and such materialsmay be shared with the Commissioner of any Compacting State upon request;provided, however, that any work papers related to any internal orindependent audit and any information regarding the privacy of individualsand insurers' proprietary information, including trade secrets, shall remainconfidential.

7. No Compacting State shall have any claim to or ownership of any propertyheld by or vested in the Commission or to any Commission funds held pursuantto the provisions of this Compact.

Article XIII.

Compacting States, Effective Date and Amendment.

1. Any State is eligible to become a Compacting State.

2. The Compact shall become effective and binding upon legislative enactmentof the Compact into law by two Compacting States; provided, the Commissionshall become effective for purposes of adopting Uniform Standards for,reviewing, and giving approval or disapproval of, Products filed with theCommission that satisfy applicable Uniform Standards only after 26 States areCompacting States or, alternatively, by States representing greater than 40percent of the premium volume for life insurance, annuity, disability income,and long-term care insurance products, based on records of the NAIC for theprior year. Thereafter, it shall become effective and binding as to any otherCompacting State upon enactment of the Compact into law by that State.

3. Amendments to the Compact may be proposed by the Commission for enactmentby the Compacting States. No amendment shall become effective and bindingupon the Commission and the Compacting States unless and until all CompactingStates enact the amendment into law.

Article XIV.

Withdrawal, Default and Termination.

1. Withdrawal.

a. Once effective, the Compact shall continue in force and remain bindingupon each and every Compacting State; provided, that a Compacting State maywithdraw from the Compact (Withdrawing State) by enacting a statutespecifically repealing the statute which enacted the Compact into law.

b. The effective date of withdrawal is the effective date of the repealingstatute. However, the withdrawal shall not apply to any Product filingsapproved or self-certified, or any Advertisement of such Products, on thedate the repealing statute becomes effective, except by mutual agreement ofthe Commission and the Withdrawing State unless the approval is rescinded bythe Withdrawing State as provided in subsection e of this section.

c. The Commissioner of the Withdrawing State shall immediately notify theManagement Committee in writing upon the introduction of legislationrepealing this Compact in the Withdrawing State.

d. The Commission shall notify the other Compacting States of theintroduction of such legislation within 10 days after its receipt of noticethereof.

e. The Withdrawing State is responsible for all obligations, duties andliabilities incurred through the effective date of withdrawal, including anyobligations, the performance of which extend beyond the effective date ofwithdrawal, except to the extent those obligations may have been released orrelinquished by mutual agreement of the Commission and the Withdrawing State.The Commission's approval of Products and Advertisement prior to theeffective date of withdrawal shall continue to be effective and be given fullforce and effect in the Withdrawing State, unless formally rescinded by theWithdrawing State in the same manner as provided by the laws of theWithdrawing State for the prospective disapproval of Products orAdvertisement previously approved under State law.

f. Reinstatement following withdrawal of any Compacting State shall occurupon the effective date of the Withdrawing State reenacting the Compact.

2. Default.

a. If the Commission determines that any Compacting State has at any timedefaulted (Defaulting State) in the performance of any of its obligations orresponsibilities under this Compact, the Bylaws or duly promulgated Rules orOperating Procedures, then, after notice and hearing as set forth in theBylaws, all rights, privileges and benefits conferred by this Compact on theDefaulting State shall be suspended from the effective date of default asfixed by the Commission. The grounds for default include, but are not limitedto, failure of a Compacting State to perform its obligations orresponsibilities, and any other grounds designated in Commission Rules. TheCommission shall immediately notify the Defaulting State in writing of theDefaulting State's suspension pending a cure of the default. The Commissionshall stipulate the conditions and the time period within which theDefaulting State must cure its default. If the Defaulting State fails to curethe default within the time period specified by the Commission, theDefaulting State shall be terminated from the Compact and all rights,privileges and benefits conferred by this Compact shall be terminated fromthe effective date of termination.

b. Product approvals by the Commission or Product self-certifications, or anyAdvertisement in connection with such Product, that are in force on theeffective date of termination shall remain in force in the Defaulting Statein the same manner as if the Defaulting State had withdrawn voluntarilypursuant to paragraph 1 of this Article.

c. Reinstatement following termination of any Compacting State requires areenactment of the Compact.

3. Dissolution of Compact.

a. The Compact dissolves effective upon the date of the withdrawal or defaultof the Compacting State which reduces membership in the Compact to oneCompacting State.

b. Upon the dissolution of this Compact, the Compact becomes null and voidand shall be of no further force or effect, and the business and affairs ofthe Commission shall be wound up and any surplus funds shall be distributedin accordance with the Bylaws.

Article XV.

Severability and Construction.

1. The provisions of this Compact shall be severable; and if any phrase,clause, sentence, or provision is deemed unenforceable, the remainingprovisions of the Compact shall be enforceable.

2. The provisions of this Compact shall be liberally construed to effectuateits purposes.

Article XVI.

Binding Effect of Compact and Other Laws.

1. Other Laws.

a. Nothing herein prevents the enforcement of any other law of a CompactingState, except as provided in paragraph b of this Article.

b. For any Product approved or certified to the Commission, the Rules,Uniform Standards, and any other requirements of the Commission shallconstitute the exclusive provisions applicable to the content, approval andcertification of such Products. For Advertisement that is subject to theCommission's authority, any Rule, Uniform Standard or other requirement ofthe Commission which governs the content of the Advertisement shallconstitute the exclusive provision that a Commissioner may apply to thecontent of the Advertisement. Notwithstanding the foregoing, no action takenby the Commission shall abrogate or restrict: (i) the access of any person toState courts; (ii) remedies available under State law related to breach ofcontract, tort, or other laws not specifically directed to the content of theProduct; (iii) State law relating to the construction of insurance contracts;or (iv) the authority of the attorney general of the State, including but notlimited to maintaining any actions or proceedings, as authorized by law.

c. All insurance Products filed with individual States shall be subject tothe laws of those States.

2. Binding Effect of this Compact.

a. All lawful actions of the Commission, including all Rules and OperatingProcedures promulgated by the Commission, are binding upon the CompactingStates.

b. All agreements between the Commission and the Compacting States arebinding in accordance with their terms.

c. Upon the request of a party to a conflict over the meaning orinterpretation of Commission actions, and upon a majority vote of theCompacting States, the Commission may issue advisory opinions regarding themeaning or interpretation in dispute.

d. In the event any provision of this Compact exceeds the constitutionallimits imposed on the legislature of any Compacting State, the obligations,duties, powers or jurisdiction sought to be conferred by that provision uponthe Commission shall be ineffective as to that Compacting State, and thoseobligations, duties, powers or jurisdiction shall remain in the CompactingState and shall be exercised by the agency thereof to which thoseobligations, duties, powers or jurisdiction are delegated by law in effect atthe time this Compact becomes effective.

(2004, c. 761.)